Monday, December 23, 2013

Catalysts for 2014 (Part 1)

Last week, the Fed finally announced the start of QE taper. Most of you would have known that QE tapering is largely negative for REITs as they are rather sensitive to a rise in interest rates. Dividend stocks are relatively more resilient, even though they were not spared from the recent correction in the local market. All these seem so gloomy and depressing :(

Christmas is around the corner, so I decided to spread some festive cheer! Let's take a look at positive future catalysts for some of my dividend stocks and REITs.


ST Engineering and SATS Ltd:
  • It is possible for ST Engg and SATS to raise their dividend payouts. Both companies are sitting on huge cash piles. ST Engg has more than S$300m and SATS has S$270m. ST Engg has strong long-term earnings visibility, with an order book of S$12.5b as at September 2013. SATS' recent acquisition of the Singapore Cruise Centre will provide synergy with the Marina Bay Hub. The joint venture at the new Sports Hub will start to reap benefits in 2015 when Singapore hosts the SEA Games.
Changi Airport T4 and Project Jewel are expected to be completed in 2017 and 2018 respectively.
  • ST Engg is the largest third-party maintenance, repair and overhaul (MRO) service provider for commercial aircrafts in the world. Since Singapore is probably going to become a regional aviation hub by 2020, it may translate to more business for ST Engg. 
  • SATS is already the dominant service provider at Changi Airport. Therefore, it stands a high chance of winning contracts/tenders to provide gateway services at the new Changi Airport Terminals 4 & 5.  

M1:
  • Barring unforeseen catastrophe, M1's management have guided a steady single-digit growth in revenue and EBITA next year. A rough back-of-the-envelope calculation shows that full-year earnings per share should be around 17 to 17.2 cents for 2014. If the management decides to maintain the same payout ratio, total dividends for 2014 should increase from 14.8 cents (2013) to 15.4 cents next year. Furthermore, the management already guided that capex for 2014 will be similar to 2013, at S$130m. So, I believe the possibility of M1 raising dividends next year is high. 
Source: The Business Times (20 December 2013)
  • Compared to Singtel and Starhub, M1 will benefit the most from the trend of consumers switching to 4G data plans in the future. Around 80% of M1's revenue comes from mobile data. 


AIMS AMP Capital Industrial Trust:

  • Redevelopments at 103 Defu Lane 10 and 20 Gul Way Phase 2E and Phase 3 should be completed by May 2014 and December 2014 respectively. The new space at 20 Gul Way will be leased to CWT with an annual rental escalation of 2%. 
Optus Centre is an A-Grade business park located at Macquarie Park in Sydney's north.
It is fully leased to Optus Administration, a unit of SingTel Optus
  • Acquiring 49% interest in Optus Centre, Sydney. This latest acquisition should be finalised by January 2014 and it offers 6 benefits. 1) Creates geographic diversification 2) Portfolio diversification into business park office space 3) First free-hold property in the portfolio with a quality tenant 4) Long WALE of 8.6 years, with rental escalation of 3% per annum 5) Weighted average debt tenor improves from 2.8 years to 3.4 years 6) Accretive to DPU

Mapletree Industrial Trust:
  • The build-to-suit development for Kulicke & Soffa has been completed recently. Distribution from this asset will start coming in 1Q 2014.
  • The various AEIs at Woodlands Central and Toa Payoh North 1 have been completed. Distribution from these two properties will start coming in 1Q 2014.  
  • The build-to-suit data centre for Equinix Singapore has begun construction in April 2013. It is scheduled to be completed in the second half of 2014. This data centre is leased to Equinix over 20 years, with the option to extend 5+5 years, at a rental escalation of 2% per annum. 

  • On 18 April 2013, Equinix held a groundbreaking ceremony to mark the start of construction of the building. The $108m project will be situated within one-north and consists of a seven-storey high specification building with a gross floor area of approximately 385,000 sqft. It is easily accessed via major expressways such as Ayer Rajah Expressway and Pan Island Expressway, and is within close proximity to one-north and Buona Vista Mass Rapid Transit (MRT) Stations.

Mapletree Logistics Trust:
Mapletree Benoi Logistics Hub is a five-storey ramp-up logistics facility located near to the Jurong and Pasir Panjang Ports and with easy access to the city. The building has been conferred the BCA Green Mark Platinum Award and incorporates modern features that cater to the operations of logistics companies.
  • The redevelopment of Mapletree Benoi Logistics Hub is on track for completion in 3QFY14, with 94% of the space already pre-committed by Menlo Worldwide Logistics on a 10-year lease. 
  • MLT will be embarking on its next redevelopment project at 5B Toh Guan Road in early FY15, which will see the site transform from a 3-storey warehouse to a 6-storey modern ramp-up facility. The plot ratio will be maximised from 0.93x to 2.5x. I like how MLT is focusing more on organic growth and rejuvenating its older assets. 


Merry Merry Christmas! ^^
Dividend Warrior

4 comments:

Anonymous said...

Hi DW

But the Fed did mention that it was a small taper of 10b and interest rates will remain low still.
The REITs market should not be negatively influenced by this news should it?

I think its good news for us REITs owners, what do you think?

Warmest Regards
Anon

Dividend Warrior said...

Hi Anon,

Yes. Interest rates will probably remain low for 2014. REITs should be fine next year. However, the stock market is known to be forward-looking, so investors may be slowly pulling money out of Asia and back into USA.

2015 could be the critical year.

Anonymous said...

forget about ST Engg.. is rarely they increase their dividend payout significantly and there are a lot of dead wood in the company

Jeremy Tan said...

Hi DW, Have been your silent supporter for awhile. I can say your golden egg is simply awesome.

May i know where can i read more information on each company dividend payout? like how much the payout and the frequency?

How do you calculate your avg price?

thank you.

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